Kouga Municipality fails its statutory obligations to its employees

This was due to the fact that Cllr Rheeder was approached by workers who complained that they had received letters from their pension and provident fund managers informing them that their contributions were in arrears.

Cllr Rheeder, a former trustee of one of the funds was also informed by the fund manager of Kouga Municipality’s failure to pay the monthly contributions since February 2012.

Several letters issued by the DA to the municipal manager regarding defaulting on payments had no effect. This left the DA no choice but to lay official charges against the offending officials. Cllr Rheeder, as trustee had to do everything in his power to ensure that Kouga Municipality executed its fiduciary obligations to its employees in terms of the various acts.

Adv. N Henning on behalf of the Director of Public Prosecutions in the Eastern Cape (Grahamstown) has rapped Kouga’s Municipal Manager Sydney Fadi, and the Chief Financial Officer (CFO) Carlien Burger over their fingers for not paying pension fund deductions from employees over to the various pension and provident funds the municipality subscribes to.

Although no prosecution will be implemented now, judgement will hold for a period of two years provided no further complaints are submitted after the judgement was passed on 20 December 2012.

It is completely unacceptable that the Municipal Manager and the CFO can knowingly and wilfully mismanage funds of the employees. Adv. Henning said that pension fund contributions and tax payments are considered statutory obligations and have preference over the payment of any other creditor.

Furthermore, these contraventions of the Municipal Finance Management Act 56 of 2003 and the Public Finance Management Act 1 of 1999 speak of complete disregard for the law, which should guide these officials in their portfolios. The disrespect for those whose pension contributions are involved is appalling.

Cllr Rheeder, who was side-lined as trustee of one of the funds still established for Humansdorp and St Francis employees before 2000. He has served on this fund as trustee for many years and was now replaced by an ANC councillor.

One wonders if the same actions would have been taken by the incumbent trustee and what this individual has done since taking on the new position as trustee.

The main problem is that Kouga Municipality deducted the contributions from the workers monthly salaries, but those funds were never paid over to a regular basis since February 2012.

This means that the employees were losing out on:

Growth in their investments of the fund

Losing benefits provided for in the individual funds for instance disability or funeral benefits

Kouga Municipality was well aware of the fact that it was contravening the law and that workers were losing out on benefits. There is also proof of an employee who lost disability benefits for the same reason.

When the DA first raised this matter in the press last year and laid charges, the employees went on strike for about 3 days. A meeting for the employees was called by the officials and some ANC Cllrs, where the ANC promised to pay over the contributions and the employees were also threatened to go back to work or else …..

The DA will continue to follow up on this matter to ensure the interests of the employees are protected. If Kouga Municipality is to adhere to the conditions set by the Director of Public Prosecutions, all outstanding payments should have been made by 7 January and again on 7 February 2013.

If any of the employees receive any further letters from their fund managers, they should immediately notify Cllr Ben Rheeder at 082 848 2514 or leave contact details at the DA office in Main Street, Humansdorp (Tel: 042 295 1851).

“The DA Caucus in Kouga will also drive this matter until Kouga Council, the governing party and its officials adhere to the law.

I will also take up the matter with the Financial Services Board, the Auditor General and the various fund managers for failing the employees of Kouga Municipality for the lack of action against the municipality” said Elza Van Lingen.

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